Question
Bright Star's CFO has asked a financial analyst to recommend a way for the company to increase 2020 net income as the company expands production.
Bright Star'sCFO has asked a financial analyst to recommend a way for the company to increase 2020 net income as the company expands production. Use the assumptions below to complete the 2020 income statement.
Assumptions:
- Earnings grow by16%from 2019 to 2020
- Costs and expenses excluding depreciation and amortization are73%of sales in 2020 (down from 75% in 2019)
- Depreciation and amortizationincreases9%from 2019 to 2020
- Interest expenseincreases10%from 2019 to 2020
- Tax rate is27%
Income Statements
(in millions of dollars)
2019
Sales-$2,376
Costs+Exp excl. D&A-$1,782
EBITDA-$594
Depr. & amort.-$90
EBIT-$504
Interest expense-$60
EBT- $444
Taxes-$120
Net Income-$324
Use the assumptions above to complete the 2020 income statement.
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
